Hundreds of companies have committed to eliminating deforestation from their supply chains by 2020, but the political landscape and market conditions are shifting as the deadline draws nearer. Here are four emerging trends that these companies – as well as the governments and civil society organizations engaging with them to zero out deforestation – should be taking into consideration as 2020 fast approaches.
At Environmental Defense Fund, we believe that environmental progress and economic growth can and must go hand in hand. EDF+Business works with leading companies and investors to raise the bar for corporate sustainability leadership by setting aggressive, science-based goals; collaborating for scale across industries and global supply chains; and publicly supporting smart environmental safeguards.
This is the third in a series of interviews exploring trends in sustainability leadership as part of our effort to pave the way to a thriving economy and a healthy environment.
Anirban Ghosh has been at Mahindra since 1999, and in that time worked across the business, including sales, marketing, strategy, and new business development. He played a key role in Mahindra’s expansion into the agriculture business, led the implementation of award-winning shared value projects like watershed development, and applied a strategic approach to the company’s social investments.
Supply Chains: vital to tackling deforestation…
Leadership within corporate sustainability continues to reach new heights as companies innovate to catalyze more progress. Early sustainability efforts focused on philanthropy. Next, companies embraced the business value of engaging in operational efficiency, such as efficient use of water or energy.
The current wave? Supply chain engagement: realizing that the bulk of their environmental impact comes from outside their operational walls, leading companies are reaching back across the chain to suppliers and producers to drive improvements.
Companies and non-profit partners still have a lot of work to do to determine how to adequately engage in continuous improvement across a supply chain and measure performance in a transparent way. But even if they solve this puzzle, it isn’t sufficient to tackle our biggest, hairiest environmental problems—like deforestation.
In the deforestation space, direct supply chain engagement is vital to manage corporate risks and catalyze improvements. But any company that attempts long-term supply chain engagement on their own typically creates a situation in which individual farms are reducing forest loss, but the landscape around them is still filled with rapid deforestation. Imagine "islands of green" in a sea of deforestation.
…but what's the next step?
In the absence of federal leadership and oversight, who will be the standard-bearer for the environment?
The opportunity and need for bolder private sector leadership has never been greater. Business must continue to step up and lead the way to a more sustainable world where companies, communities, and the environment thrive. Your legacy must now be a legacy of leadership and stewardship. One cannot exist without the other.
Long-term economic growth and business competitiveness depends on a thriving environment. By 2050 there will be 9.5 billion consumers on our planet, all demanding more energy, food, products and services than ever before. This presents a huge challenge, and a huge opportunity for business leadership, collaboration and advocacy.
It is up to you to inspire, influence and innovate for a future where both the economy and the environment can prosper. We know this is achievable because we’ve proven it. Environmental Defense Fund (EDF) has been at the forefront of this change for 25 years, bringing cutting edge science, policy, and economic expertise to high-impact companies – including McDonalds, Walmart, and KKR – to transform business as usual in their products, operations, and advocacy. But now it’s time for all of us to raise the bar.
Set big goals
- Loud and clear signals are sent to employees, customers, investors, competitors and other stakeholders that they are planning for long-term competitiveness; not short-term politics. By publicly committing to bold environmental goals that reflect their impact and influence, business leaders are building a legacy of responsible prosperity for their organizations.
- Big public goals inspire competition and results. There’s never been a more important time for business to create a race to the top, not because regulations demand it, but because employees, customers, the economy, and the planet deserve it. And, business operates on a global scale. Environmental leadership and oversight –or lack thereof — in the U.S. is no reason to fall behind in the global race to dominate the clean energy sector.
- Big challenges breed big innovations. Rarely do business leaders know exactly how they will achieve their aggressive sustainability goals; but instead use goals as an impetus to innovate. Sustainability is a business challenge like any other – solutions and efficiencies are found through strategic, innovative thinking and an openness to bring the right people to the table to find the most transformative solutions.
This effort is well underway. To date, over 275 companies are taking action on science-based targets. Here’s a step-by-step guide to learn more about setting your own science-based target.
Collaborate for scale
Private sector leaders must work together and use their purchasing power to inspire a future where both business and the environment can prosper. There is too much rhetoric coming out of Washington, DC today about a false choice between a healthy environment and a growing economy. To borrow a well-used phrase from former Secretary of Labor Robert Reich …that’s rubbish. The good news is that we can have both. There are currently over four million jobs in the clean energy and sustainability sectors across all U.S. states. The solar industry is growing at a rate of 12 times faster than the U.S. economy. Business is innovating to create cleaner air and water, safer products and abundant, low-cost energy supplies while figuring out how to accommodate a growing population without decimating natural resources.
Business leaders must look beyond the four walls of their own operations and drive broader change across their industries and global supply chains.
Get started with EDF’s supply chain solutions center.
Shape future safeguards
The good news is that the momentum for a sustainable future is not going to come to a screeching halt now that Trump has said the U.S. will pull out of the Paris Agreement. Business leaders have voiced their intent to stay the course, loud and clear. But business has always relied on regulatory guardrails for long-term planning when it comes to the environment. What happens now?
First, if your company is already on the front-lines of climate policy, keep your foot on the gas and your brand at the forefront. If you need help stepping up your sustainability, EDF and other NGOs are here to help to drive business- and planet-worthy victories.
Second, if you’ve been sitting on the sidelines waiting to see what happens, now is the time to join the conversation. Step up and voice your business-first reasoning for a clean energy, sustainable future. Collaborate with others in your industry to amplify the message. Join other like-minded business leaders to uphold strong, global commitments.
How you can get involved:
- Add your brand to the 1,219 mayors, governors, college and university leaders, businesses and investors who have voiced their continued support for the Paris Agreement – We Are Still In.
- Join the world’s most influential companies in committing to 100% renewables
- Ask your Representatives to join the Climate Solutions Caucus
In the absence of federal safeguards for our environment, it is time for business to lead from the front.
Follow Tom on Twitter, @tpmurray
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For the people who dedicate their lives to helping keep the planet livable, it’s hard to wrap one’s mind around our new weird, warped, post-election world. Every day seems to bring some new government official denying facts and science (aka reality), or doing unthinkable damage to the suddenly-less-venerable institutions they now lead.
As someone who has a 20-year track record of working side-by-side with the private sector to create positive environmental change, I can just imagine how anxious business executives must be feeling these days. The specter of a three a.m. tweet from the White House demanding that they run their company according to a Presidential whim, rather than the realities of the global marketplace (or the expectations of shareholders), can make for a lot of sleepless nights.
Unlike certain “business-executive-Presidents", however, real CEOs have to be fact-driven.
And the forward-thinking executives—the ones who are thinking hard about the long-term growth, profitability and resiliency of their companies—are well aware of the facts. They know that human-caused climate change is real, and carries with it huge costs. Executives selling food grown in rapidly changing landscapes and/or products dependent on materials from across the globe aren’t playing in a fantasy world where climate change is a “hoax invented by China.”
And they know that how we deal with climate change will determine whether we will be a driver or a destroyer of business value. As a peer-reviewed study in the journal Nature recently found (and the New York Times reported): "even if the world is able to stave off an increase in atmospheric temperatures of 2 degrees Celsius or 3.6 degrees Fahrenheit — a goal agreed to as part of the Paris deal — climate change could wipe out $1.7 trillion worth of global financial assets."
So, I’m hopeful that, at least in terms of sustainability, the rational decisions being made on Wall Street will act as a counter-balance to what appears to be erratic decisions coming out of Washington. Consider just a few of the recent announcements and actions of the private sector:
- In just the past 3 months, Google, Microsoft, Pepsi, Smithfield Foods, Walmart and many others have continued to lead the way and prove what’s possible through bold, science-based goals, investments in clean energy and expanded efforts to drive down emissions in their operations and supply chains.
- At the recent World Economic Forum (WEF) in Davos, Unilever CEO Paul Polman said “to make America great again, climate action is very logical. This is a very convincing story for job creation and economic growth.” My colleagues at EDF Climate Corps back this up with data; the sustainability sector is booming with jobs that 1.) can’t be outsourced, and 2.) are readily available in all fifty states.
- A WEF report on the future of retail talks about “the golden age of the consumer” and the implications and opportunities that are created for sustainability by addressing how goods are delivered—what is called the “last mile of delivery”—and how products are packaged.
- Commenting on that same report, Walmart CEO Doug McMillon pointed out that sustainability will impact retail in ways far beyond logistics and packaging: in this age of social media sharing, the push for transparency in supply chains will be customer-driven. McMillon knows that “retailers will only survive if their business creates shared value that benefits shareholders and society.”
- Finally, in a recent op-ed entitled Why Walmart is doubling down on its commitment to climate change, Walmart board member Rob Walton, gave a simple answer: because it’s good for business! “We set [our climate goals] because we wanted to help address climate change and improve lives, while also strengthening our company and reducing expenses,” he said. “We thought it would be a win-win: good for society, and good for Walmart. Eleven years later, that's exactly what we've seen.”
That’s a long list—and one that adds to the mounting evidence that corporate America “gets it”:
momentum for business leadership on sustainability is here to stay. Which is in no way surprising, because after my many years of working with business, I’ve seen firsthand the immense value creation that comes with moving forward—not backward—on environmental issues.
So, for all that has changed in these times of “alternative facts,” those who care about having a livable, thriving planet can feel confident that they have a powerful ally in business. Because when it comes to our climate, our health and our planet itself, if we’re not making progress, we’re losing.
The largest pork company in the world, Smithfield Foods, just committed to reduce absolute greenhouse gas emissions by 25% by 2025 across its upstream U.S. supply chain, from feed grain to packaged bacon. This goal is the first of its kind in the livestock sector; and is thus big news.
It is also a long time in the making. Over the past 20 years, EDF and Smithfield have not always seen eye to eye. Although we have opposed Smithfield on some critical issues, we have collaborated on others. Most recently, EDF and Smithfield worked together to help farmers who grow grain for hog feed use fertilizer efficiently and improve soil health. The business and environmental benefits that Smithfield discovered through that effort led the company to want to do more, resulting in today’s industry-leading commitment.
As part of the commitment, one area where Smithfield will work to reduce its greenhouse gas footprint—and one that EDF applauds—is in manure management.
In the past, EDF has pressed Smithfield to improve its manure management, particularly the use of uncovered hog manure lagoons. Now, within the first five years of its commitment, Smithfield will install manure management practices, including covered lagoons, on at least 30 percent of company-owned farms. These changes will eliminate harmful methane emissions and reduce ammonia nitrogen, which contributes to human respiratory illness and impairs water quality. Furthermore, Smithfield will work with its contract growers to expand the use of those practices over the full term of its commitment.
It’s inspiring to see Smithfield’s overall climate commitment and willingness to change its position on an issue like manure management. It shows how NGO/corporate collaborations can work over the long term.
With its climate commitment, Smithfield has set the bar for other livestock companies. We encourage others to follow Smithfield’s lead and set their own public targets based in strong science to reduce the climate and environmental impacts of animal agriculture and food production.
Sustainability in food supply chains: a challenge worth tackling
The climate crisis can’t be solved without addressing emissions from livestock and agriculture:
- The Environmental Protection Agency (EPA) estimates that 9% of total U.S. greenhouse gas emissions comes from agriculture (making it the 5th-largest source of domestic emissions;
- Globally, the U.N Food and Agriculture Organization (FAO) estimates that livestock accounts for 14.5% of all global greenhouse gas emissions;
- An FAO address at COP 22 noted that, while global agriculture contributes to nearly 20% of greenhouse gas emissions, it is also a “fundamental part of the solution to boost resilience and combat climate change.”
Food and agriculture companies, however, face major barriers in setting and achieving supply chain sustainability commitments. As a general rule, the majority of their environmental impacts come from the many disparate farms that grow the grains, produce, and animals that end up in our food. For companies that often do not even know the locations of those farms, it is a major challenge to influence those farmers to become more sustainable.
At the same time, food and agriculture companies see that consumers are demanding increased transparency and responsibility for all of their impacts, particularly those on human health, the environment, and animal welfare. The challenge is to figure out how to make needed improvements without substantial price increases at the grocery checkout.
The business case for sustainability – and collaboration
Companies like Smithfield are watching consumer trends and placing a bet that sustainability will be good for their bottom line. They can’t reap these benefits, though, unless they focus on providing value to the farmers in their supply chains. This value can come in many forms – some companies are offering premiums for sustainably grown grain, while others are helping farmers access programs and technologies that reduce the costs of farming.
As a vertically integrated company that owns grain elevators, feed mills, hog farms, and pork processing plants, Smithfield has a unique view into its own supply chain. But many don’t know that Smithfield purchases half of its hogs on the open market, which means the company only has clear visibility through half of its supply chain for pork. In setting a goal for its entire upstream supply chain, Smithfield is committing to work with others in the agriculture industry to assist a broad range of hog and grain farmers adopt more sustainable practices.
Smithfield’s collaboration with EDF demonstrated that the company could improve sustainability in feed grain production, the most remote link of its supply chain, in a way that benefits its business.
This success created the opening to go further, developing Smithfield’s new greenhouse gas target and putting the company in a leadership position in its industry. While Smithfield is the first livestock company to set a major greenhouse gas reduction goal, a sustainable food supply depends on it not being the last.
Many of us spend a considerable amount of time thinking about food – whether it’s deciding what’s for dinner or how healthy something is for our family. Given that I work on food sustainability and am married to a chef, I spend an even more extreme amount of time thinking about food.
Last week, the Wall Street Journal hosted the first annual Global Food Forum in New York City – more proof that food and agricultural issues are increasingly on the radar screens of many executives, including those from Walmart, Campbell’s Soup, Panera, Perdue, Monsanto, and many more.
I was eager to attend the event and hear the discussions among some of the most powerful food companies out there. They covered many topics including food safety, “clean” labels, biotechnology, antibiotic use and the humane treatment of animals.
All important stuff—but given the prestige of the event, I’d like to bring up the elephant in the room (or more accurately the elephant not in the room): sustainability. The environmental impacts of agriculture were barely touched upon, and considering the corporate heavyweights who were in the room, this was a missed opportunity on a massive scale.
Why? Because across the entire food production supply chain, sustainability and profitability go hand-in-hand. Consider just a few of the advantages offered by sustainable growing methods:
Increased efficiency and cost savings: Crops take up on average only 40 percent of the nutrients applied to them each growing season. The rest is susceptible to running off the field, and contributing to water and air pollution.
But optimizing fertilizer use—using just the right amount and avoiding over applying—can mean higher yields and lower input costs for farmers, while simultaneously reducing that pollution-causing runoff.
Improved supply chain resiliency: One of the biggest risks that businesses face in the coming decades is supply chain disruptions caused by climate change. Unpredictable weather events like flooding and drought can mean grain shortages or inventory losses.
A couple of years ago, thousands of jobs were lost when Cargill closed meat processing plants in Wisconsin and Texas because drought had reduced its cattle count. And, according to a UC Davis study, last year saw about 542,000 acres of California farmland being left fallow for lack of water. That's about 7 percent of the state's irrigated farmland—meaning thousands fewer farm laborers had work.
But sustainable growing methods can help mitigate these risks. By helping farmers become more resilient, businesses are also protecting themselves by ensuring a consistent, dependable supply of goods. This improved resiliency is something shareholders are increasingly aware of.
Improved customer trust: The ability to share where and how ingredients are grown helps meet consumer demand for transparency. Consumers are clearly becoming more educated, and to remain competitive businesses need to respond to this demand.
Given all this, what advice do I have for the organizers of next year’s WSJ event?
First off, include deforestation, which is responsible for nearly 15 percent of the world’s greenhouse gases. In many tropical nations, it is more economical to cut down forests for farmland than to protect them.
In addition to taking on a massive carbon footprint, companies sourcing food from deforested land are likely exposing themselves to legal and ethical risks. Solutions exist, such as sourcing from large-scale zones that operate under an umbrella of sustainable practices, but companies need to be educated and informed about their options.
Second, shine a spotlight on corporate sustainability leaders helping make farmers more resilient and profitable, such as:
- The Midwest Row Crop Collaborative, a diverse coalition of food companies, retailers, and nonprofits working to expand on-the-ground solutions to protect air and water quality, enhance soil health, and maintain high yields throughout the Upper Mississippi River Basin.
- Land O’Lakes’ SUSTAIN® platform, co-developed by EDF, which trains agricultural retailers in best practices for fertilizer efficiency and soil health. The ag retailers then bring this knowledge to the customers they serve. Kellogg Company, Campbell’s, and Smithfield Foods are all using SUSTAIN as a way to connect directly with growers in their sourcing regions.
Lastly, talk about food waste. Up to 40 percent of food in the U.S. ends up in a landfill – the equivalent of $165 billion each year. The only way to truly address the environmental issues of our food system while feeding a growing global population is to reduce food waste, which translates into improved bottom lines for farmers, food companies, and customers.
So, yes: I spend a lot of time thinking about sustainable food. But sustainability is clearly where the food industry is going.
The WSJ Global Food Forum should be thinking about it too.
I admire corporate sustainability leaders who, as hockey great Wayne Gretzky once said, know how to “skate to where the puck is going, not where it has been.”
I’m optimistic about our future when I see courageous leaders at companies like Unilever, Pepsi, Mars and others lead the way by looking beyond short-term profits for long-term success and publicly advocating for the smart regulatory and policy changes required to preserve the natural systems that people, communities and companies need to thrive.
Yet, there are too many companies that still rely on old excuses when asked to take a public stand on energy and environmental policy.
To be a bold leader in the 21st century requires a strong voice on the most pressing environmental issues of the day. It’s no longer good enough to put a green label on a product or declare in an annual report that your company is making the world a better place. It’s time to take the next leadership step.
At Environmental Defense Fund (EDF), we like to call the next step of sustainability leadership the business policy nexus. It simply means that your company has aligned your sustainability goals and strategies with your external engagement on policy.
If your company isn’t operating in the business policy nexus, it’s time to retire the following excuses and go public in support of forward-facing environmental policies:
Excuse #1 "We're not political."
Companies can no longer be silent on issues like the environment. Customers expect the brands and companies they love to stand for something and to show leadership on issues that matter to them.
In previous decades, this excuse might have sounded more like, “we want Democrats and Republican to buy our products.” However, this recent working paper by researchers at Duke and Harvard suggests that C.E.O. activism can sway public opinion — and even increase interest in buying a company’s products.
Corporate neutrality on the issues that matter may be outdated. If you don’t believe me, maybe ask Paul Polman of Unilever or Indra Nooyi of Pepsi or Yvon Chouinard of Patagonia. Their corporate voices ring loud and clear when it comes time to stand up for the environment.
Excuse #2 "It's not part of our core business."
In a 2015 article the head of government relations for one of the world’s biggest companies told the Guardian: “There’s a reluctance if a regulation doesn’t get into your core competency to get into somebody else’s backyard. It’s an unspoken acknowledgment that you stick to your knitting.”
The earth is everyone’s backyard. And the state of our environment affects every business.
Just take a look at the companies who have backed the Clean Power Plan. “Clean energy” isn’t the core competency of global giants like Amazon, General Mills, Nestle, or Levis, but these companies and many others made their corporate voices heard for the good of business and society.
Excuse #3 “Our government affairs team deals with policy.”
Some corporate leaders have been passing the buck to other departments, other industries and other leaders for too long.
You have a responsibility to inspire everyone in your organization to maximize the triple bottom line: profit, people and planet.
Leaders find it easy to measure profit; measuring social and environmental impact is a little harder. Without good data, no one in a company feels comfortable taking the lead on policy.
This is where an NGO like EDF can help make a difference. EDF has built a framework for corporate sustainability success that encompasses science, strategy, and systems to create measurable environmental and business benefits. Your organization can use this framework to become a sustainability leader and confidently stand up for smart climate policy that addresses your future business risks.
The old excuses don’t work anymore. So stand up for change and advocate for policies that will help us overcome the most serious environmental challenges we face. The issues are too important; the consequences for little or no action are too serious.
Follow Tom Murray on Twitter: @tpmurray
Why is it that some environmentalists feel the need to play whack-a-mole whenever a leading brand peeks its head above the fray to publicly declare a corporate sustainability achievement?
I’m not going to cite specifics – just look at the comments section of any major news outlet covering a big brand sustainability announcement – but I do want to address the negative impact this has on business stepping up for the environment.
As an environmental NGO with a history of working in the trenches with powerful businesses, Environmental Defense Fund (EDF) often gets to play the mole role. We’ve endured our share of slings and arrows since first partnering with McDonald’s over 25 years ago, so I can empathize with companies who are reticent to step up and publicly acknowledge the sustainability work they are doing.
EDF has thick skin and a singular mission to forge solutions that help people and nature thrive. It’s not always the same for major brands that have to balance the needs of shareholders, suppliers, employees, communities, and yes, the planet. It’s difficult to step forward and share sustainability stories when doing so invites backlash. I get it.
While environmentalists push for change in corporate business and policy practices, we must also adjust our attitudes in working with and encouraging those businesses who are trying to make a difference.
Basic behavioral psychology leads me to believe that if we want more major companies innovating, executing and sharing best corporate sustainability practices, the whack-a-mole approach needs to stop. Read more
Earlier this week, a former sustainability executive with McDonald’s delivered a wake-up call for environmental groups, listing “5 ways that NGOs stunt sustainability.” In this article, Bob Langert explains the ways that nonprofits are failing to help companies turn sustainability commitments into on-the-ground results. In the context of sustainable palm oil, he notes:
“You can’t just go after big brands and expect them to manage a supply chain that has them seven stages removed, starting with the smallholders, to mills, then plantations, to storage facilities, refineries, ingredient manufacturers and then product manufacturers, then into a final product a retailer sells, such as ice cream, a granola bar or shampoo — with palm as a minute ingredient.”
He’s right – sustainability in supply chains, especially in agriculture, is incredibly complex.
So how can environmental groups effectively champion sustainability progress throughout global supply chains, from the C-suite to crop fields? Here are three ideas EDF has learned from deep, on-the-ground partnerships with leading brands. Read more